James Ahiakpor writes: >Roger uses data indicating that "business depreciation" in 2003 >amounted to over $900bn to buttress his claim that "Household saving >is mostly absorbed in residential investment" and that the "business >sector as a whole is usually a net saver." He maintains the same >view of businesses as net savers even after I'd cited comparative >data in 2003 (from Hubbard 2005) showing that the savings of >households in bank deposits and holdings of corporate equities dwarf >the $900b in depreciation charges for business. Not even after I've >tallied the entries in the Fed's "Flow of Matrix for 2005" (p. 115) >in which households are net holders of financial assets and >businesses are the net issuers. And Kevin Hoover sides with >him. What else can one say in the case of a refusal to admit an obvious error? Where is the obvious error on my part? In his earlier post, James Ahiakpor conflated two things. First, he claimed that firms are not net savers. Second, he claimed that firms are net holders of financial liabilities. While he treats these statements as if they were the same, they are not. And it was only the first of these that I objected to. And, I have not commented on other claims (for example, about depreciation, in the discussion). While James Ahiakpor keeps referring to p. 115 of the Federal Reserve's Flow of Funds Accounts (http://www.federalreserve.gov/releases/z1/Current/z1r-6.pdf) entitled "Flow of Funds Matrix for 2005" and subtitled "Assets and Liabilities", the right page to look at for savings is p. 114, the "Flow of Funds Matrix for 2005" subtitled "Flows". For after all, savings is a flow -- not a stock. The flow table on p. 114 line 3 ("Net Savings") shows that nonfinancial firms (column 4) are net savers to the amount of $291.9 billion; financial sectors are net savers (column 14) to the amount of $167.7 billion. In contrast, households (column 2) are net savers to the smaller amount $161.5 billion (which, we should note, is substantially less than the savings of nonfinancial firms, and even more so of financial and nonfinancial firms taken together). the only claim that I made was that businesses are net savers. This is the claim that I took Roger Sandilands to be making originally. It is not an obvious error, but one that is fully born out by the appropriate data. James Ahiakpor is apparently unwilling to make the elementary distinction between the flow of savings (which may be both real or financial) from the stock of financial assets (which ignores real assets). On the question of stocks, the table on p. 115 would indeed be the correct one. That table shows (comparing line 1 to line 3 for appropriate columns) that nonfinancial firms financial assets are less than their financial liabilities ($13,362.3 billion < $14, 560.1 billion), financial sectors financial assets are greater that their liabilities ($50,729.4 billion > $49.647.1 billion). Consolidating the two sectors leaves assets $115.5 billion below liabilities. In contrast, households are net holders of financial assets: $38,729.5 billion > $11, 925.6 billion. All this is consistent with everything that I previously wrote. There is no obvious error. I am sorry that James Ahiakpor thinks that it is productive to imply that I am incompetent, foolish, or willfully ignorant in not agreeing with his statements, I think that the facts fully support the specific claims that I made. I regret the tone of implicit and explicit ad hominem in this thread. If I don't reply to any future posts, however, it is because I will be offline for about a month, not because I am unwilling or unable to respond to legitimate arguments. Kevin Hoover